HubSpot (HUBS) 12 Feb 202019 Q4 Earnings call transcript

Company Profile

Participants

Chuck MacGlashing	Head of Investor Relations
Brian Halligan	Chief Executive Officer & Chairman
Kate Bueker	Chief Financial Officer
Mark Murphy	JPMorgan
Siti Panigrahi	Mizuho
Richard Davis	Canaccord
Stan Zlotsky	Morgan Stanley
Alex Zukin	RBC
Samad Samana	Jefferies
Kevin Kumar	Goldman Sachs
Ken Wong	Guggenheim Securities
Arjun Bhatia	William Blair
Ryan MacDonald	Needham
Jennifer Lowe	UBS
Michael Turrin	Wells Fargo Securities
Peter Levine	Evercore
Koji Ikeda	Oppenheimer
Kevin Ruth	Raymond James
Tom Roderick	Stifel

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the HubSpot Q4 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to MacGlashing, conference Head like speaker to now Chuck today of would hand over the your I Investor Relations. you. Thank ahead. go Please

Chuck MacGlashing

and Thanks, Officer after conference this Halligan, welcome Bueker, full and Financial in the the Kate discussing operator. call fourth that announced and closed. Good and was our Officer. With release quarter on issued the to results Brian year market Chief Today, Chief afternoon call. HubSpot's earnings Chairman; is press Executive we'll the be our XXXX afternoon, me

Before we to draw today's to attention statement your release. Harbor included start, I'd press like the Safe in

XXXX we'll call, amended of XXE Securities meaning this may Section and be Exchange to forward-looking the XXXX as Act make During of our of business Securities that amended. as statements related the XXA Section the within of of considered Act Exchange

of and than management's performance are All and growth expected expectations statements XXXX. including first full for fiscal year future quarter the statements, regarding and financial of statements historical and operational our financial business including expenditures, statements guidance fact other outlook, operational forward-looking

views our expectations. November to that and could from actual our in reflect or XX-Quarter, undertake X, these and update of release cause Please obligation as by of language materially law statements Forward-looking we except Form with risks on as filed no uncertainties and press statements. to forward-looking revise XXXX, the to today, which cautionary discussion refer the required SEC was the for a only results differ today's

each between found press measures Regulation of we'll release the earnings most Investor financial G. section a used measures of non-GAAP defined fourth XXXX course directly non-GAAP by within such our financial differences or measure measure call, quarter of today's discussed, certain GAAP the be website. to financial in reconciliation the Relations can our During comparable to refer The as

Brian it's turn Hubspot CEO my Chairman, to over to call and Halligan. Now pleasure the

Brian Halligan

as HubSpot year way today grew and I'm XX% fourth full two and joining We the folks. the you We out quarter QX earnings afternoon, closed X%. Thank Good we Chuck. operating full currency the points review year team for XX%. expanded to margins year us and constant with by non-GAAP revenue by Thanks, results. just happy full over year. XXXX HubSpot's really

customers year with XX,XXX while Total our XX% That surpassed up year-over-year, how adoption I'm multiproduct of of to XX,XXX at results, customer exceptionally financial I'm the while HubSpot. became grew proud the pleased XXXX it nearly said, customers.

right hard. key our of as the is when even company do principles One it's aim thing a to to

meant this of for could customers products our heavily couple back steps this to our but it: speed unsexy, fruit. a in invested usability. security, with infrastructure, critical These we pieces of the investments and Sometimes emphasis starting taking bear so move it. an steps real year on are in multiple We

out second a at customer uptick year. closed the dollar retention with the of retention reached half in in We QX nice which record high revenue above a XXX% year-over-year, and

gratifying Scores were our saw high record of QX things Net the customers. Promoter most One from we in

Scores lift the Promoter the word retention for across been metric. a mouth. for from our saw years We HubSpot in really of Net a We've improving XXXX. proud I'm big well experience to future platform and we been investments working on bodes This the of customers' improve it's made. QX stubborn efforts in

passed QX from XXXX, our HubSpot our In total the just customers are benefiting ecosystem. we the in million installed. also flywheel. that X not we it's made customers' software center making great progress it's integrations over products of Now our

more and their more In customers Hubspot addition will to our that with flywheel. we acquired enable that synchronize PieSync applications to

to better grow partners I we're we to program relaunched much of more service. even that which Program our made marketing Partner XXXX beyond investments sales attract will we week, Just last diverse think better agency customers a in into positioned Solutions the set XXXX. into and partner Because a in lead our will and new of enable differentiate

HubSpot comes our for businesses no growing complexity. serving on use, easy from always our have that to software roots focused is time making

We've the Over those to needs adapted too. more years, powerful their become customers have grown. and

kind because ease I the want point become more assumption they in for a have this industry. on to stay I There's in important place as the that tools industry see to of software sacrifice moment, use. to how it's our an powerful, a of

or one pick is easy expression. common powerful a be can You

I it's of limit Because point honestly, of think complicated platforms them. software, customers use to power versus ease, choice and this if too powerful who the what's software and use? the

this to choice. dispel We wanted false

Looking to HubSpot's comments support starting including from like six top seems won customer already leader, and enterprise our reviews on marketing best it categories we're GX, best across at results. recent and just overall rank usability, best software NPS,

being company easiest the won business We for enterprise also the to do category. within

powered-up targeted limits marketing, hub attribution, adding keeping marketing revenue Along while account-based the partitioning, at other XXXX features started a relaunching forefront. higher chat, those enterprise, multi-touch advanced lines, usability we usage and by

sophisticated needs they following By relentlessly balancing scale. platform that customers this across year and power of will HubSpot be the with you'll offerings, more never the across believe to as product platform We'll we ease-of-use announcements be outgrow. meet our the

Place our we Best us United Annual hiring. States of the number to for report I'm a side, Work caught and Company Glassdoor's that were Place up one happy Survey We all Diversity in Work voted the in and Culture, as recruiting Top top business the on and help On while voted should Women, the talent. selected fully which continue Singapore to Best to

hires One first from She'll we to her. Dropbox of Officer, HubSpot admire. Very happy was to Customer us even to have comes year and grow Workday, Yamini ever Chief Rangan most companies two enable better. hiring our momentous the

company. XXXX our was need we into and well direction. year It XXXX head and us a gave platform equipped the important confident us as an to for feeling foundation in team

that in just our remarkable how a those today can disruptive experience believe that remarkable are end-to-end get. excited show We're companies experience. create I XXXX that customers customer most to the

With that, over it I'll to Kate. hand

Kate Bueker

Brian. Thanks,

Let's year an quarter and of in full XX% and first results currency grew turn revenues while Fourth quarter basis. subscription revenue reported. full quarter year-over-year XX% X% and fourth declined to both year-over-year grew year services constant on XX% XXXX. and year-over-year as our our for financial as-reported revenue QX guidance

year while XXXX reported. again Full in as grew XX% year revenue grew year-over-year, year-over-year reported. revenue as year-over-year Full currency subscription XX% grew both and XX% XX% constant revenues services

QX, Domestic currency was revenue as XX% revenue reported. year-over-year in in XX% in constant while X points growth represented and international grew year-over-year. revenue revenue XX% of up total XX% International QX,

year-over-year. million, up XX% million, of on was increase a as in the $XXX of an Calculated end revenue billings was Deferred December basis currency. and year-over-year as-reported $XXX XX% constant

customer with in was HubSpot was sequentially which ended total $XX,XXX, revenue year-over-year. subscription XXXX XX,XXX and Average slightly year-over-year. both XX% QX customers, up up per

Please per subscription excluded impact non-GAAP customer will comments pricing our note we've The measures. the revenue remainder my of refer customer and of in metrics. average total to

margin negative gross XX%, was Full quarter up compared was was margin X%. about XXXX. year while to gross gross gross point Fourth X.X down XX%, margin was point services Subscription year-over-year. margin XX%, X.X

period operating was margin versus to year points the same up operating last X.X%, quarter Full slightly year. XXXX. down X compared margin was Fourth X.X%,

investments back employees of up point the additional the had growth X of us pleased changes exiting quarters are our year-over-year X,XXX quarter and get the increase XXXX. last original We fourth we allowed on the end made XX% plan last we to operational that quarter. a over in hiring couple At from

million CapEx diluted for and XX% capitalized quarter per million $XX fourth million of of software million for income $X.XX in Net income per full XX% of year. or $XX year revenue XX% quarter the including revenue was or year. $XX million Free share. for or revenue and of diluted the or quarter revenue $X.XX costs cash for was share. the $XX development was the or the full in $XX the Net X% was flow $XX fourth full million or

totaled Finally, full billion cash over $X marketable of December. With into year XXXX. our dive equivalents cash, quarter guidance securities first the end of and and that the for let's at just

XX% $XXX.X to between fully is net Non-GAAP is between to $XXX.X $X.XX the the and assumes be year-over-year. quarter, outstanding. revenue $X.XX. is and of expected income operating per first to approximately diluted For $X.X shares million range This to diluted Non-GAAP expected million. total million share million expected $XX.X XX.X be up income million in be

year $XXX.X million to fully And shares to of $XXX.X is revenue $XX approximately Non-GAAP up $X.XX full million Non-GAAP XXXX between be This per assumes total to is for diluted the range million expected income XX% share million of expected is and million. and year-over-year. diluted operating be be income the outstanding. XX.X between in net $X.XX. $XX to expected

full and X as QX at revenue XXXX. you both than foreign adjust full current faster in of exchange total to X for QX point grow your rates, point the mind than expected models spot revenue the a Subscription forecasting we're in to for year. faster following: As revenue revenue reported headwind keep is X points and total year

points strong we little year, to X as our PieSync expect hiring down and margins in of as this strong the back-half over Given well in into reduction continued of QX XXXX and first X.X acquisition the year-over-year second in This XXXX part be a hiring be an XXXX. to half the first expected full half year flat of to the the margins point translates for operating year. of in the

and and more to flow expect be cash muted XXXX and million cash with in for QX stronger free cash QX. about free flow flow We $XX free QX seasonally in QX

as build-outs finish our of X% the We half location, expect Berlin of to about heavier and of expand first in a year percentage and spending as in the the kickoff build-out XXXX San CapEx levels be Francisco. Dublin our revenue campus in Cambridge with we

back hand I'll for remarks. his that, closing With to over the call Brian

Brian Halligan

operations a excited to experience not in precisely powerful reliable a on free about on stand that XXXX tools every creating an will which company be or globally investments start-up intuitive, user whether out ahead business. and the get remarkable our companies experience we large a relent because their to many to it's to using the HubSpot has our that their that did ones scaling Believe and that today made ensure grow Thanks, I'm customer Kate. platform year last customers working companies customer so their right. the the

not of brand flawless, together fragmented to excited In going are come a and helpful up. perfectly that often work or work single keeps with that a day. hard together We're focused technology to products genuinely to and me that's that staff makes we differentiated but NPS tied customer every field messily build a working

our around helping grow by our to millions HubSpotters close thanking help customers, to possible that better. investors of organizations our all and our are advancing want partners, the in mission who make globe the I to

call a up Operator, questions. let's open the few for

Operator

Murphy comes question first Your from Instructions] from Mark JPMorgan. [Operator

Mark Murphy

Thank Yes. Brian. you very much,

the lag infer scale. is hiring. this wondering have XXX% into kind two? we Your kind if Mainsail and of that at getting though sight behind you that I'm having past talked effects robust as a kind pretty on revenue of guidance Do you And sometime in should you've fallen moving line project about the terra of quarter back the on then feel you're past moving of that firma. or next

Brian Halligan

Sox Yes, Red Sox, bridge they of -- a was year going bridge Mark. for and Boston do. I their lost kind Mookie Betts is be fan a Hi, manager. away traded and David XXXX firma. They Red of XXXX for Terra Price. I'm year kind to just a the

bridge here. a at looking So,

year. made XXXX couple or was for is four idea steps this the of huge for We steps forward the Mainsail. HubSpot. did ready a And took three investments. year us We get back. bridge We

mind. an accurate that's assessment on my So what's of

I think we're year to really this have going a good year.

Mark Murphy

on going them market. reach have out And with you to of heavy to pretty a make responding How sense? the core if And of you've a are if and even it's Okay. into you trying price tired complex focused point Or pretty the it to if away product? follow-up are maybe higher turn it's sort you if you larger be realm? intensely of do remained engagement, pulling incumbent a you you them doesn't sometimes the little a when as get engage organization they SMB

Brian Halligan

to would got someone a as lot. growing a one will if couple and optimistic off this of an -- will school. year HubSpot things a high tier think Like of we another improve year, after I'm I years our is from ago that system start-up us of back of this the they the and one two graduate junior analogy HubSpot use with like and buy steps I of reasons about enterprise be the three product

to and take through college school, college can want PhD, We we want that's them but year. law school to an least at pay may to not And through grad keep you going grad be school. or for but and this your we effort

win longer. accounts so we'll we'll And accounts mid-market keep think we more solid and

good about that. feeling So

of taste announced growing their like of needed I've partition need the people are different a that seen that hub more marketing about is just in the been on sophisticated of divisions enterprise, this we have in back. a way. bigger you've couple talking to functionality instances that marketing type early And and calls accounts what geographies and good-sized weeks ability

in able much marketing. and them are that report what They like, accounts more based able let's able take to on and And need in way. They segmentation selling account-based that their do then to sell way. to to and be to able segment into do segment to to say, into effect their Gigi on sophisticated need be marketing advanced they be be need to and reporting a to they're attribute need activities

just we released things new our enterprise in marketing hub offering. three Those

we're good think I to start off a there. So

Mark Murphy

having the top Thank your questions you both for head. for off analogy the of perfect

Brian Halligan

no done I'm analogy. more

Operator

Your next Panigrahi comes Siti from question Mizuho. from

Siti Panigrahi

for Thanks question. my taking Yes.

bit dig if marketing great? sales of on XXX% will growing are growth those wondering characterize hubs and how I'm of the could performance Just and they want you year. this to mid-XX% some -- a end any each into these Mid little hubs be services And then talked you that sells color about last marketing year of and rapidly. of service.

Kate Bueker

at Yeah, have in last I'll detail in we sort quarter not that talk is adult which will start at of year, about the hub two that with It's that supervision something point again our Day we year. years is but response, over likely Analyst a it out on the we that this shared something share quarter the level basis.

Siti Panigrahi

Yeah.

but color -- of That's of those? any Okay. in terms adoption

Brian Halligan

opportunity getting kind very well. she a in excited marketing service nicely. as going is and way. it's really we're think pretty with a big product year sales a of product little That steady and The pretty it's growing been over new. there. I the products that It's steady only old is goes It's grow

better, So, or good get Big we Those three years over to feeling a and hubs about about good the market. lot feeling have. them. year next better hubs two are going the

Siti Panigrahi

All right.

for that. Okay. Thanks

Just progress in the moving market. the off on

back of how you terms adding reps your into do to and enterprise sales engineers guidance for and so features? So, XXXX? expectation guidance, up XXXX more your terms moving in adoption service of plan market ramp in product system What's for

Brian Halligan

ask the Can you question again? Sorry.

Siti Panigrahi

segment I to XXXX, I are hiring, your for upmarket? So, system of from off the just understand for that? moving baked and for enterprise market. more -- -- What expectations mean in just action sales the into wanted rep what's terms adding And engineers your

Brian Halligan

I from us. there think products investment The some see early. you'll

stick think about product accounts. we're you'll I customers improve wouldn't the that that here XXX. longer. think call year hub seen this Fortune you'll see I just it lot. the selling see enterprise new You've talked in layer And I of with into a We're us marketing I

platform in more we of opportunity employees employees two have to standard a employees. And attractive XXX and the or X,XXX between think X,XXX that company and want company kind between five I mid-market, be employees. an be we for to a

side. So, investments we're that side there there I making think too making investments product will bear the on in We're fruit. the some go-to-market

Siti Panigrahi

you. Thank

Operator

Your comes next Richard question from from Davis Canaccord.

Richard Davis

very thanks much. Hey,

you net So, one thinking, think you when guys retention. question, I a I dollar went had was public,

at you're XXX. like it that think was or like but XX something I

of dollar the the is So know add Because a to to we lot need people by question you it that don't a structure Or get is, XXX? like another business this retention to to net hub do just just XXX of But grow on get a should I that sometimes. it to out kind say year. to to always be listen, retention kind I'm of that that dollar figure trying questions we of and will XXX? XX% XX% continue whatever will

Kate Bueker

mean, reality is Yes. history. right the I I you're think your in

last consistently turn of you revenue total of that if up to the was And clock, moved mid-XXs. think over I retention sort in pretty at company around It's the the years. we the and sort are back of low- XXX. number for

things comfortable driven sort time of have we revenue much more that have plus. changed maintain become said of retention have that company. drive The as what or that think, a I XXX we can that over is we're suite we that

coming more things of from cross-sell. upsell see the like You

In sales seats. the for incremental are adding people example, hub

a as will have into we the we enterprise, the levers. continue we see to of lot well. of So functionality And of sort as upgrades add more addition

continue above So, I retention. see we contributing sit to at I we the do or will think can think, XXX that trajectories we remain we're different -- or of comfortable sort different that to and things

Richard Davis

that a way So maybe. that I'll as definite maybe. take Long held --

anymore expect CFO. wouldn't I from the So,

I'll so good. let you, Thank guys So you that's go. much.

Brian Halligan

Richard. Thanks,

Operator

Your comes from Stan from Morgan Stanley. Zlotsky next question

Stan Zlotsky

Thank partner thinking margin One you're us Kate, you hub? is, the guide stepped-up much questions. the and of the taking Two for just versus the year of is you impact could acquisition full us guide making my PieSync? walk for enable the half down the through And of could service so you support to due point Perfect. -- And to hiring them about growth questions much but to into that growth ecosystem for Thank you help first basis operating to points for how hub XXXX? service you. three for are how changes then the breakdown me. the the not dilutive in XXX the

Brian Halligan

Okay.

Chuck MacGlashing

It questions. sounds like four

Brian Halligan

I know.

Stan Zlotsky

Two question, two parts.

Brian Halligan

start take the it. Okay. of I'll

on a people helping talk program service generate them customers way And and industry the that couple flywheel partner sales leads, moved and think the added part helping HubSpot in hub years of all had I the we've pull and we last build through. people about and from we've full ask software over before. in hub a historically service this the been was important program. has calls And we me it's marketing agencies. about historically marketing talked we and

That going agency partner program is well.

This our from partner rolled quite so agency from into of was of agencies program was name week the of was a one. and are well out solution something have solution last the or Some day marketing program really for piloting announced just think I of program. is going while. best a well. to our It The production selling couple about been we've a as changed partner moved a pretty ago. it and to we've talked We doing other we piloting change weeks the full it just I've important

I door of partners. the hundreds service thousands across sorts sorts all think partner is to will of implementers. world hope this of of CRM convert pull IT that potential into partners. is and into our interesting that we new companies There the all open companies are business There types

I business they'll customers. for good be be good think very to our for

underway. that's So

second provider moving implementers and a it We but bringing for model which kinds implementers we agencies of all make announced a freemium IT basically a wasn't also to partner The to just partner easier made change HubSpot. our to is CRM it program marketing become from partner. into

not and And so of really think our last that our benefit rebrand partner a we just week customers major to change going but ecosystem. our just change, major, is program I announced

The thing grow spinning with spinning program, implement flywheel and them and solution want giant together. these is way that partner our We key that that what HubSpot. to is as I kind bigger is flywheel really getting this accounts spinning partner of which second helping both the ecosystem think And There's programs. about faster. around have we that's like HubSpot customer spin well

Kate Bueker

we QX really half profit been our should in last margin We guidance months. for side the was front XXXX we the about that the to. that on we've the the deliver talked because operating year at we narrative of And about All with over waned got rank more six right. hiring. fact consistent serving the behind talking least leverage And than on

hiring investment up and incremental our caught we and XXXX, impact of frankly continue specifically. margins QX then in made sort into PieSync, to our starting as so P&L we through hire and more see well And QX on that we're the to

the was the of see the acute prepared it back the You remarks And the R&D business. impact much of here majority on of what the we're should really than that that XXXX. part the can primary investments to And the be the ramp. that because we year headcount driver making going half the and front in shared in – is that's frankly in the see anti-leverage is you the of more is the side

Stan Zlotsky

the how to point way Is year break margins they much versus impact up between to much how is there XXX basis a hiring? in full down catch is PieSync could

Kate Bueker

more the and the QX We QX. won't hiring. a is provide rolling we've on sort And that see a fact result up we of specific caught of that into breakdown but it of

Stan Zlotsky

it. Got

Okay. Thank you.

Operator

Alex Your next from RBC. question Zukin comes from

Alex Zukin

guys. Hey, Thanks taking for my question.

for kind this Kate how in as that another an to from the of going And competitive should wanted guess up think margins. I I you're you should evolving some XXXX up we then of landscape there? margins So the trough level against and kind and to the up about we kind we of of then – on really see just who market and ask think just year one about investment trying competitive at incremental go start deals. unseat

given broaden of organic as for product-focused product that new we hubs organic. a Or and stay should of at development the portfolio? of years this a couple the kind consistent continued Is kind level we both

Brian Halligan

one our to help to the customers to is at the first value just characterize what in a increase customers. experience. on part to huge very, about landscape. There's differentiation here what competitive more no to the changes we're delightful better the of R&D of customers competitive from working take increased I hoping would HubSpot and deliver hard is can Kate's that talking our And Alex. kind deliver up we create I our very investment

use. easy really been to Our products have always

they're GX powerful Net whatnot, awards we're from and these all We highs. layer in functionality. and now all-time Promoter win more to Our hitting scores, sharing

year. feeling I good it for combination So that's really we're this about a and think good

Kathryn Bueker

the that IPO, sustained top growth can that we that again this the that But And profitability long-term, want deliver over-delivered framework we – at expansion. but in drive Yeah. business profitability over over-delivered continuing And there. we think line XXXX. to to we're And a we yet that's expanded framework same on we the for have believe and make against profitability margin as We time the balances side, over a we and profitability. long-term still the effectively growth right believe since sure you we framework have is the can invest long-term. profit and know,

sure Just want make we're long-term term. the balance and we – right finding to that between short

Alex Zukin

it. Got

Okay. Thanks, guys.

Operator

from Your next Samad question from comes Jefferies. Samana

Samad Samana

taking Hi. Good evening. for questions. my Thanks

and decision know you So changes other company SMBs? customers? And any question. But say you're Brian more towards for ask the you much you will vein I and model more people geared that that by have asked model the I'll would pulled a this in up-market? the market think Or by the differently, pricing being you up large enterprise slightly there go-to-market be do which to that to push is is

Brian Halligan

and And want five on just marketing like really sales service side so the lot There's side some largest or the I stuff that's the And there's sight. getting things a of called four us yeah, and rhythm business we this our up-market of But accounts. run that, just morning the these would we top it's some in say that accounts easy ticked-off, pulled. of go our feeling of better meeting top we kind side, love really those to the it. about to they us we're use. things in I do. was a through largest on

it's definitely a so And pull.

they these and an as have them accounts grow. opportunity grow with keep We larger to

some let's bit the a it's This them. for we got it little the and it. yeah, delivering build is get like, to mail finally can the functionality just like year we to So therefore

consumer boy with combined really boy to combination with too. we awesome think use, powerful are can level an I of these really are easy really these like them delight

that use of in They're great. with with windows do of PC you day, one anything. customers you the is Windows, analogy could kind to, the a like And we're could or talking a buy it. back just Mac can And you buy on the they

applications. build can You

developers. have We

He I guys worked heading do There you whatever of that of money appropriate We're software the not where think beautifully. And We was really he's have are but a is can just there. want, bunch you beautifully. an in Apple integrations is the Everything we're Apple, beautiful, right. Mac CRM of like lumber you designed industry. that the was way. not the but maybe together

Samad Saleem

Great. follow-up helpful. That's Kate. for maybe a And then

we for side larger guidance about think factor the the of maybe think maybe XXXX does for the you cycle? my when customers Or business Thanks On outlook about so rev revenue? should deferred just with how elongation in billings maybe a a more model of as of there the that about the it, that they basis? the should think kind revenue and rec how taking question. lot And

Kathryn Bueker

change of we're in Yeah. factors I those mean, what in there's not assumed guiding a step-function so. any

Operator

Chris Your next question comes from Merwin from Sachs. Goldman

Kevin Kumar

of this a new us and quarter. drove what and can remind my typically the this Thanks. question. adds customers? takes is saw hub, then adoption there uptick is talk maybe bit customer Can puts And a This Hi. you Thanks you Net taking Kevin on Kumar cross-selling specifically much on nice for terms how customer for strength? versus Chris. about in

Kathryn Bueker

I'll – don't start. why Yeah,

So, is pretty marketing customers there, really We strength for the QX. growing really in happy highlight on had we XX,XXX across so XX%. I in with saw the about customer us, the enterprise. starting high good the sort happy. account in watermark additions nice We're some feeling generally, additions new would growth We're through customer of QX, that. a X,XXX board,

and about a QX. starter little a as free we we e-mail that of launched the in bit might You in talked QX, fact on impact had remember

it's little So bit. nice to see that tick of back-up a kind

Brian Halligan

customer hub. question understand your didn't Kevin, I on

Kevin Kumar

that you get to existing a customers? of to -- Are primarily cross-selling trying sense Just that more product? is landing with

Kate Bueker

Hub So, talking I'm Service customer assuming when you're you that about mean hub?

Brian Halligan

means. he what That's

Okay.

Kevin Kumar

Yes.

Brian Halligan

Service Hub.

Kevin Kumar

yes. That's right. Yes,

Brian Halligan

Sales I on compare base, you're Okay. pretty there. Sales a on all is Hub it up in and bigger, is been when holy to stuff it a-year-and-a-half well. a-year, of Service crap, the magic together. like do of to there how Hub larger growth's our tripped this, get content is when our it's all one and I unlocked is, customers installed get Hub the to a of power marketing tripping course, that solid. up far system, they going lot use using Hub, What's Service management of

And business little so, way. a lot super of early. Service a is that Hub Still coming

a a I and nice think, market it's big for it. opportunity

Kevin Kumar

you. Thank Good.

Operator

Your Wong from comes Guggenheim from Securities. Ken question next

Ken Wong

Great. taking question. Thanks for my

something maybe as in first is to And next The Last the you, one, number? wrap were think, Any year? up that half main Brian. still mentioned, update as quarter, on you about went, I for you XX% expect sales guys this through. first you far that of guys

Brian Halligan

I'm asked we really me it's QX run come sales that, people of And way with to gosh, made a the rely glad you their folks, entire the to main approach products. really, remind last us I'm really on that. about front happy to new We've the build we realization just year. in office. decision to

long our piece very We And around important a are intend we puzzle. customers' long, time. to a of be

And want to We a reward lot so, that us. want we -- put to trust. trust they of in

don't made lot updated progress time a We've only last And that main of I number think team the speed, since work it. way really on the teams a foundational where, head, top had use issues, of ease most there. product of inside out I've and infrastructure, of basically building tremendous feature. on HubSpot of I to a my So on and new -- progress sale have not build of but made every single focus the that. new are was that security, we're of the at we we don't

it's Ken. like feels it working, And

Our Score. Net Promoter

likely one two So scores, We've you then time. a tracking to our of that Net HubSpot we Promoter Hey, on why? and a or colleague to for how questions. been refer friend metric a ask customers are XX long scale

very budget. we We move. sale just been -- It's main able to number But worked. had haven't to have a very, the hard has

And so, But that in about well bodes the for We you number. a big it -- lift excited QX see saw I in that retention were think future. really that. in

in well the bodes it think, customers cost for I future. to acquire

going it. think, from lot going think, to to a we're I it's I -- benefit really

last in this year. that's of The products. mode now, We're starting other because out have build that we to happening thing new teams them are is of the most

So put of Score bunch with it high we ease Promoter power. that Net and that combines the enterprise a marketing hub use just that out really more in, with we came

main think a going definitely sale steps So about a of to forward that steps definitely It and feeling because go back of decision. was it. good we're I few couple

Ken Wong

And billings. it. of are quarter thinking maybe guys Appreciate the should mix growth? be was something you and how How headwind product touched the factoring of guys product impact on, mix then, for Brian. we Is color a that billings of in Got XXXX? a about just there, Kate, bit new last you also

Kate Bueker

equation. I moving say, is There always, as would there. a billings are complicated Yes. a pieces lot of

helped tailwinds. was in-period and I on think, our move the QX largely billings, us of side, sort FX but a at had looked we and some headwinds to if you billing bit so headwind a revenue, offset the that.

finish. a had We solid good December a also really marketing strong had We quarter.

in on headwind continue side. sales shift expect the into see from of that and continue helped to from the away marketing duration on sort we will product XXXX. that So and do we us service into a there how That's and billing the

Ken Wong

Thanks a Great. lot. Perfect.

Kate Bueker

the think, in I growth general, I we've what that's will still revenue that think billings currency and is think about to constant it. trend together. said right in way growth

Ken Wong

Kate. Thanks, Great.

Operator

question comes Blair. next from Arjun from Your William Bhatia

Arjun Bhatia

getting taking that think traction, It Hi, Brian, good Hub some your really in guys. I sounded Thanks Sales for remarks. you is question. opening my mentioned like

customers? now, but few you're the of Just with when – of something I help think that's from Or landing seeing years terms few there a and more this we're what best marketing cross-sell existing years or customers versus of of hub? curious a motion kind a release a past now? in new away viable thinking is it kind product is as just still of we stand-alone coupled should wondering start market this

Brian Halligan

we is to cross-sell tons of new customers than And and pulls in versa. vice It's wanted well. a worked on we marketing existing we we that be to said, then new did just the that that magnet Yeah. – good that make customers in not thing It's into we that magnet want marketing pull product works sales that both. so cross-selling it's in. we extremely marketing was, become sell can customers that the it to It for to

in both together. customers of Lots buy

it's so on And its own. viable

they're of customers all have We we sales and have four use products of a together. of that hub just all doing using our them three, lot And great. lot a

the both answer it's So it. – is on

Arjun Bhatia

on helpful. Got to caught you've see that great the then it. And it's front, That's hiring up.

Just you in curious, Is step-up such a maybe, how about those And with hiring? that into large come how kind some many on that you're tight of risks kind the influx XH? handle process bringing of scaling on-boarding in thinking managing of window? are managing people so have in people that your of to come

Brian Halligan

feeling better bad onboard in it and year took a done but while it. out team to really we mean, about way it a we little figured ago, a I'm And I job obviously our the proud us rethink much them. of they've of challenged spot good, Feeling that. them. were there billing fantastic were and they and a

folks back the the we're but we're I'm all that of So get great. people them, quality I on I to with of don't headcount. pleased in. really meet interview bringing are

the going. an parts recruiting just absolute of organization machine Certain have

States I think some to been in these us there We've like the like helps Company do. really United Work that that's the the to For taking of Glassdoor winning Award. thing hard awards the Best is

remarkable You people need think I do really I that. starting have culture, and to a it's to And do to pay-off. remarkable

good. the seems tight So now. is The quality on-boarding

way I think the in we've year. long come last a

Arjun Bhatia

quarter. congrats on the and Got Thanks it.

Brian Halligan

you. Thank

Operator

Tillman Your SunTrust. next question comes from Terry from

Unidentified Analyst

guess Thanks just most the most the that's of Hey, Nick is established. one is guess, first relevant on I our sustaining forward? for going catalysts Terry. above I actually of moving one guys. various the on hub XX% for forward the And growth. marketing taking This products for questions.

Brian Halligan

just with the It's came release much think I much, hub more new we powerful. marketing enterprise. out

use who I Marketing think customers Hub upgrade. Pro will

think new driver I a marketing us. I will are for be think we we'll have hub think we'll But the deals. thinking And nice enterprise I churning, about customers sophistication around. stick competitive because that win didn't who using we're and

Unidentified Analyst

it. Got

Okay. And then as a quick follow-up.

So have market you competitively? seen any greater activity as Salesforce the essentials in

Brian Halligan

of Haven't while. couple it's seen time-to-time, for for see from it a last but there, We been quarters. it similar the a big feels way shift out the felt to it

Unidentified Analyst

Got it.

Okay. you. Thank

Operator

question from MacDonald next Ryan from comes Your Needham

Ryan MacDonald

anything to I for adoption solution you that. It's as you Are you. started Brian of now in or free taking up or Thanks and the CRM are since add trends first hub of that the Are of question. customers? higher quarters Hi. a of around been the signs guess solution? my to see that What few to functionality they solution for of bundled really you more to suite free that into off terms starting of products the seeing some of products of move yet? starting

Brian Halligan

I addition would progress free it, CRM getting of The It's is on better. solid and say. been our steady

taking using doing the their of never free pro. on of them and our say, importing, let's on the it – free work starting start free users, someone the start inviting really Our well people CRM We're to to on-boarding from their used them context, getting and is who's themselves team races. to to colleagues growth getting off the in getting the

progress. steady we're making So

got improve over that it. the I think year. plans hub you'll big this for see We've of course

there'll And XXXX. be there progress throughout continued steady so think I

Ryan MacDonald

is that you Customer Thanks. coming the structural in follow-up. hiring a the XXXX to pretty expect days So here I since going new of organization it's of person there just we to Obviously, mean, early new changes anything terms Chief but quick in? the as Officer, announced then and should with

Brian Halligan

Yamini. that. Yes. her in. A was change Thank a made we you There couple structural about to for thoughts asking bring of on

and So, It's had that. in marketing, the under first time services we Hubspot done Yamini. we sales, combined

great people customers. think a Chief think in -- on A experience title. lot it's in focus our the our like I pay of Officer, the Officer. of we for also call We off of will haul. type her numbers long as that Customer want We role I her Revenue that call Chief creating a

beyond training. But short-term. major her. of gelling everyone out that be smart really the changes I expect in and mean wit just seems don't is got with she I She to

so So, with I'm happy hire the really far.

much then understands so promotion her at One about like she light she of at spent time better we long Dropbox, than time motion freemium than Workday, spent she the so understands that do. a long that I do. upmarket is touch all us a things better of And she

I to think she's great. so going And be

Ryan MacDonald

you. Thank Excellent.

Operator

Your comes from next UBS. question Lowe from Jennifer

Jennifer Lowe

lot of Great. discussion on being customer going discussion There's a how around There's lot in sale said of year you. big Maybe many as those you priorities Last the enterprise. resources product a reallocated the now other just focus. And bit. main earlier you been to do cases was a improve back Thank experience. to projects. are a been

focused push really in better the you're the product? and Or today to that are it want what see -- more to is year, at the use to about of think you If getting next of the low-touch enterprise more side into this continuing the you the or making a on Day, starting this hubs to in think where years couple you're year the of something a prioritizing there that to a out about Analyst discussion that R&D of of at is really in that still be more was terms resources? could focus start the future. Is

Brian Halligan

Main and new top tier the things like In clarification like a like and point new bottom infrastructure, little is on or security is is features Jennifer. of bit A sale EMEs mass Great. sale. and things main Thanks usability. speed is functionality. middle the powerful the

do build teams any to What powerful we get is hierarchy functionality. needs all or challenge new entire any of could features new before that through the to they

of So, contact to on. and levels that means building most on are and functions. lives middle are the in It's teams -- features hierarchy just will they that that through lives that levels the new our now bottom our

that to on is stuff. don't want lengthy get we What do

and bottom those the stuff. have a teams products. the kind of levels off satisfied on middle of product races So, new way we it's the are new to build and Most

new -- products, surprising Having new that sale, build when said the be starting shouldn't they're release hub of it through to that came they're main cool out the XXXX that, just part really are in in and that really at enterprise levels XXXX. top main the that marketing those we beginning getting sale cranking of stuff because of started through on bottom XXXX

feeling where this have there. a very, better there's we product going The sit. are so going about year might very you more new good see we And to to be activity get hubs

Jennifer Lowe

Thank you.

Operator

comes Turrin next Michael Fargo Securities. Wells Your from question from

Michael Turrin

Hey Good afternoon. there. Thanks.

in growth. working through quarter I'm wondering given year, past of of this half way hiring of heading into may if Just maybe in up an from to if currency in another results? Thank how back put ramp there's the you constant XXXX? hiring been cohorts the you. XX%-plus quantify the of any then QX you've terms here back still much topline how any we should those newer and have And of ramp contribution shape of had employees the impact about think

Kate Bueker

Yes.

Brian Halligan

and I assuming? we I'm think it's hard behind would to falling faster grown assume have

Kate Bueker

Yes, is definitely Quantifying it there's complicated. it's number. bit more Yes, a obviously positive definitely. a

hiring months of they should you got way it six that typically QX on the up half become organization the for is to to think about we it throughout in live seven productive. back a on depends fully where the really like think in caught And I QX. them about takes rep

revenue And time for bit of to example. then in you'll see that that a takes little like up things show

of the kind of phase we the Yes. expect so XXXX. course And to over see impact in

Michael Turrin

you. Thank

Operator

next comes Kirk Evercore. Your from question Materne from

Peter Levine

Levine Great. Thanks for taking my in for Pete Kirk. question,

is on international purchasing any any moving than at adopting here about the investments? balance color of home, U.S. the international different stack behavior upfront So seeing you're up? just customers we to the between one our versus what Curious things. buying versus think side meaning how just full Just know the should one and

Brian Halligan

do between going are where markets at unit the has international we where U.S. We the been relative strong. the We investment look and are significantly International over similar. reps is behind invest economics way really economics well. versus Our quota. The pretty the invest we

in look pretty and decide the globe. is in. We'll look we'll Hubs the those invest darn is purchasing at lead invest. The peers flow the and the and where whatnot on internationally We'll at across all patterns more factors similar truth

domestic similar surprisingly the almost and markets. of in So, each international

Peter Levine

a maybe Brian where in I your terms it's hints you'll know any can hub go? you of question new asking just that but mentioned see worth last maybe

Brian Halligan

We thing don't typically tuned. forecast that of stay kind

Peter Levine

you. Thank

Operator

comes question Ikeda from next Your Koji from Oppenheimer.

Koji Ikeda

Great. question. Thanks taking for my

of curious change quick close the balance there the thinking overall a is in both billion any on or With you. on cash to $X I hear forward? scale thoughts potential be M&A the Thank in strategy M&A the the Just about a appetite sheet, had velocity to target going one of should the your here. activity? guess we and way

Brian Halligan

Hi Koji.

it looking I We HubSpot. wanted are how want picky. had good that reasonable at would a We be to about be to with a we want word price. describe think to pay we wanted it, deals. work we respect. We We one We -- team to If culture definitely legit want to be the a technology.

something buy want of our we use when the sure and powerful easy to at then we time. same And doesn't to very make it sort apple-like break

the do So but we want in want market we we only still in be to deal we definitely acquire, be careful we're who acquire. we but think the ever about I about who thinking careful won't to just be

Koji Ikeda

end some standpoint next if I question. to strong seeing verticals vertical just then Thanks out verticals are that maybe I a what right are wondering From you're focus areas gain now. demand in for there may. And taking what over more awareness the Great. my was And market year? follow-up one

Brian Halligan

but this per number In services mostly roughly are companies, companies, I'd is know I se. for nice verticals versus big, vertical There's tech-enabled services no big XX% for don't BXB into big It's -- us XX%, BXB professional services this software those say companies don't hold BXB, companies, BXC. us.

Operator

from from Your next Raymond Peterson Brian question comes James.

Kevin Ruth

development a I think of product how number enterprise Brian. thoughts you for know tier? across the of on your intermediate have over given moving do trend updated on the any term, Kevin you here comments but just ASPs pieces, It's on still there's some

Kate Bueker

little stability had continue And little positive a seen we range We mix. of XX,XXX in years trends the at ASRPC that's Frankly, nice. ASRPC. in hub uptick we've a level. feel over driving like been we to of bit the The with see really is around individual an is biggest QX which bit and past of nice. thing couple product again Yes the

a start bit. over I little think can the pickup that to feeling longer-term, we see And we're that,

Kevin Ruth

guess button. beta you curious Now, including for share or that then, the That's enhancements And adoption Buy announced hub some insights any feedback you a And how sales helpful. at on I was could customer inbound, And that was going? early there? I

Brian Halligan

A and are adopting that liking it. It's well. of people going lot functionality

for partners Our implementing that folks. are

off You'll lot cash bullish hits the sales up, that area more see between where balance leaves thing and a of kind where of overtime. that the were I'm sheet. about

room I think of there. there's lots in

Kevin Ruth

Got it guys. thanks

Operator

next comes from Your Stifel. question Tom Roderick from

Tom Roderick

Thanks questions. afternoon. for good my Hey taking

So here. of you me one at the Brian, let sort first

Just PieSync more. little thinking bit about a

few under it months. belt You've your had a for

bit go-to-market, your it's still know go-to-market? it? And but are you're integration you how that on can more just pushing and how products product it think you its as embracing I with about little a about early, talk customers in So, own

You've got over XXX application integration.

front of find that to and with So a And it bring sync and then might office allow your the integrate to data other way do more data you are record? using utilizing HubSpot back more the applications the side. they have as comer on to be customers the

Are more they Thanks. product little Just them to using patterns. integrate a applications, that with bit now. more across go-to-market And with usage hubs? your different about right talk

Brian Halligan

as enhancements going well. It's do let's got as good wants you how a to like making make to customer more you powerful really possible. like dynamics, is do make for really engine stick say It's and powerful as Microsoft to easy that. customers, much technology. PieSync it big Tom. And to as it Sure, who a possible They're that team. our synchronization good

HubSpot the be different ways very very, in in haul some is stuff. on powerful and embedded inside technology see long What hard working over that, they're cool ways. So, synchronization you'll will of

so happy for really We're to going well acquisition us. really with think I it. that out work And is

Tom Roderick

product-related Outstanding question. and then, one just other

free mentioned at a that has little start in bit You just of marketing the the e-mail product there's cannibalization a And you earlier care. of maybe touched that, that marketing offering. on prior quarters been low-end the of

and seeing then, that? patterns the adoption any marketing? on you Is And some having features? What Thanks. to adoption are and of hub on seeing what with are lower-end, marketing in you of core it usage again respect impact e-mail sort

Brian Halligan

that's change of the start products. e-mail that received. been And into our was think interesting I of is, products. layer our we put marketing free And made well layer we

seen or note cannibalization Pro. of from We any haven't Starter

but cannibalization. no has There's the -- big little the bit they they kind October a in moved short-term steadied themselves so, little change, a by of that number -- September, on

And I get pretty starter well. investment still is we're legit. in better legit. products is area to They're a those lot we our starter That free you to that's think pretty pretty at, early going what an it's I'll to pro product enterprise on. that can cycle tell moving free

Tom Roderick

very I appreciate Outstanding, it. thank much. you

Operator

At was this the to that I call question. Halligan, our And last for time, will final Brian turn over remarks. back any

Brian Halligan

for all joining. it. Thanks Really of you appreciate

Operator

conference Thank call. you today's gentlemen, and Ladies participating. this concludes for

may You disconnect. now

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